1) In the circular-flow diagram, which of the following items flows from firms to
households through the markets for goods and services?
a.goods and services
b.dollars paid to land, labor, and capital
c.dollars spent on goods and services
d.wages, rent, and profit
2) US citizens have better nutrition, better healthcare, and a longer life expectancy than
citizens of Ghana. Which of the following conclusions can be drawn from this
statement?
a.Average income in the US is higher than the average income in Ghana.
b.The US has a higher standard of living than Ghana.
c.Productivity in the US is higher than productivity in Ghana.
d.All of the above are correct.
3) Table 10-5
The following table shows the marginal costs for each of four firms (A, B, C, and D) to
eliminate units of pollution from their production processes. For example, for Firm A to
eliminate one unit of pollution, it would cost $54, and for Firm A to eliminate a second
unit of pollution it would cost an additional $67.
Suppose the government wants to reduce pollution from 16 units to 8 units and auctions
off 8 pollution permits to achieve this goal. Which of the following is a likely auction
price of the permits?
a.$69
b.$81
c.$83
d.$97
4) For a country producing two goods, the opportunity cost of one good will be the
inverse of the opportunity cost of the other good.
a.True
b.False
5) Table 15-9
Consider the following demand and cost information for a monopoly.
What price should the monopoly charge to maximize profit?
a. $16
b. $20
c. $24
d. $28
6) If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in
quantity supplied, then the price increase is about
a. 0.25%.
b. 1.2%.
c. 2%.
d. 12.5%.
7) As the number of firms in an oligopoly increases, the
a.price approaches marginal cost, and the quantity approaches the socially efficient
level.
b.price and quantity approach the monopoly levels.
c.price effect exceeds the output effect.
d.individual firms’ profits increase.
8) If scientists discover that steamed milk, which is used to make latt©s, prevents heart
attacks, what would happen to the equilibrium price and quantity of latt©s?
a.Both the equilibrium price and quantity would increase.
b.Both the equilibrium price and quantity would decrease.
c.The equilibrium price would increase, and the equilibrium quantity would decrease.
d.The equilibrium price would decrease, and the equilibrium quantity would increase.
9) Table 18-2
Refer to Table 18-2. The table shows the number of bracelets that can be assembled
per week by various numbers of workers. If the price per bracelet in a perfectly
competitive product market is $5, how many workers would the firm employ if the
weekly wage rate is $375?
a.1
b.2
c.3
d.4
10) When average total cost is above marginal cost, average total cost is rising.
a.True
b.False
11) When indifference curves are bowed inward, the marginal rate of substitution varies
at each point on the indifference curve.
a.True
b.False
12) Antitrust laws allow the government to
a.collect revenues through the antitrust tax.
b.break up companies.
c.purchase privately-held companies through eminent domain.
d.All of the above are correct.
13) Price discrimination adds to social welfare in the form of
(i)increased total surplus.
(ii)reduced costs of production.
(iii)increased consumer surplus.
a.(i) only
b.(i) and (ii) only
c.(i) and (iii) only
d.(i), (ii), and (iii)